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Transit investments maintained in federal budget as long-term national transit infrastructure program prepares for launch

March 1, 2018

This year’s federal budget continued the government’s commitment to transit infrastructure in Canada that has been established over the previous two budgets. Though no new spending was announced for the transit industry, this was not a surprise as there continues to be committed and dedicated funding from the federal government on the books until 2027-2028.

Whereas infrastructure had been a central theme of previous budgets, the 2018 budget focused on gender equality and other social or progressive issues such as investment in indigenous services, conservation and pharmacare. It included slightly more than $20 billion in new spending and no significant cuts. With robust economic growth of 3% that led the G-7 nations and record-breaking job creation in 2017, the budget signaled a slowing Canadian economy with a projection of about 2% growth in 2018.

The lack of a strong transit narrative in the budget was a first for this government, but it should be no cause for alarm within the industry. Currently the $3.4 billion Public Transit Infrastructure Fund is being administered and, through consultations with the government, it was announced in December that eligible costs for this program will be extended for another year into 2020. Meanwhile, the government continues to work on the next phase of national transit infrastructure investments through the negotiation of bilateral agreements with the provinces. These agreements, worth $20.1 billion from the federal government over ten years, are expected to be announced in the coming months and still have the potential to reshape Canada’s urban mobility landscape.

The only new information within the budget regarding transit had to do with the re-profiling of funds from the next phase of transit investment, which will be laid out in pending bilateral agreements, until later in the program’s ten-year life span. As it is currently planned, $11.2 billion of this fund’s $20.1 billion will be spent in the final three years of the program (2025-2028). CUTA is watching the re-profiling of these funds closely but has received no signal from either our members or the government that this re-profiling should be a concern for the transit industry. Any members or stakeholders concerned about the re-profiling are encouraged to contact us.

CUTA views the current level of re-profiled, or back-loaded, funds as sustainable for the following reasons:

These funds remain dedicated to transit and, once projects begin to be approved, lapsing these funds or using them for different purposes will become increasingly difficult.

The backloaded profile of these investments reflect how the transit industry actually uses transit funds—where federal investment is only spent after receipts for a given project have been filed.

Similarly, this re-profiling should help the industry fight the narrative that transit funds are left unspent each year as the government’s budgeted investment in transit will closer reflect it’s actual spending at the end of the year.

Still, CUTA will remain vigilant in ensuring that this government will follow through on its commitments to improve urban mobility in Canadian communities. It is widely expected that, as part of the next phase of transit infrastructure investment, municipalities will need to provide provinces with three-year transit investment plans for their communities. It is vital that transit systems and municipalities work now to determine their spending priorities over both this three-year window, as well as the program’s 10-year lifespan. It will be incumbent on transit systems to demonstrate the need for transit in their communities by creating a clear project pipeline for their province that justifies this unprecedented investment into transit by all levels of government.

VIA Rail received funding to update its fleet in the Windsor-Quebec City Corridor. According to the budget: “funding proposed for Transport Canada to replace VIA Rail's cars and locomotives for use in the Windsor-Quebec City Corridor, ensuring that VIA Rail's rolling stock in the Corridor will remain safe and comfortable, and generate fewer greenhouse gas emissions. Funding amounts are not being released due to an upcoming procurement.”

Other areas of note in this budget include a new Women in Construction Fund starting this year. This fund will be worth $10 million over three years and according to the budget “will build on existing models that have proven to be effective in attracting women to the trades. These models provide supports such as mentoring, coaching and tailored supports that help women to progress through their training and find and retain jobs in the trades.”

A few more details on the government’s carbon pricing plan were announced. Provinces must submit their own carbon pricing plans by September 1, 2018. In the absence of a provincial plan, a province will be subject to a federal carbon pricing system. Provinces that wish to join the federal carbon pricing system voluntarily should let their intentions be known to the federal government by March 30, 2018. The Government will review each provincial system and implement their federal system by January 1, 2019.

There were no substantive new details on either the Infrastructure Bank or the Smart Cities Challenge, two funds that have ear-marked funding for transit. However, Canada’s five superclusters were recently announced and, while there is not transit supercluster, there is an advanced manufacturing supercluster in Ontario and an artificial intelligence supercluster in Central Canada that could invest in transit technologies.

As always, CUTA’s Public Affairs team will be working with the government and other stakeholders in Ottawa to ensure that transit and urban mobility remain a central priority for the federal government. As bi-lateral agreements between the provinces and the municipalities are signed in the coming months the Public Affairs team will be sure to provide analysis and insight into what these developments will mean for CUTA members.

Anyone with questions regarding the federal government’s commitments to transit infrastructure are encouraged to contact Jeff Mackey at mackey@cutaactu.ca.